BA changes OnBusiness to revenue based earning from 27 May 15

In an unexpected move BA has ‘enhanced’ its programme which rewards businesses who have travellers that use BA for their travel. Many SME’s use this scheme, called OnBusiness, to offset some of their travel costs. The scheme only requires two distinct travellers in order to qualify for membership.

Until the changes announced by BA yesterday take hold on 27 May, earning has been based on fare class (not value) and destination and is quite generous in premium cabins. The scheme is very popular for redemptions as it often has much better availability than Avios as it pulls tickets from higher fare buckets than Avios can access.

Points stay alive for 3 years under the current scheme, although this is one of the changes coming, whereby BA will move to expiring them after 2 years. (Points earned before 27 May will keep their 3 years life).

The changes announced occur for trips after 27 May, not just tickets purchased after that date which is what BA did with the recent changes to Avios earning.

The current OnBusiness scheme earns along these lines (round trip):

There is also a table showing earning on BA codeshares on other carriers on the OnBusiness web site.

For example in the chart above, a Club Europe return would earn 240 points each way, 480 total. The changes are going to require you to spend £480 on that ticket to get the same number of points.

The cheapest Club Europe return to Dusseldorf in the current BA sale from London City is £199, earning about 200 of the new OnBusiness points. Very few BA tickets cost £480 to Europe as they are often discounted with associated fare sales and rule restrictions.

The new rules allow earning on pretty much the total price paid for the ticket – ‘fare, any carrier imposed surcharges and all government imposed taxes and fees’ as the BA web site says at a rate of £1 = 1 point.

The new rules allowing earning and spending of OnBusiness with BA, Iberia and American Airlines. Not quite sure how this is going to work if you have an AA BusinessExtraa account.

The new system will move to earning Tiers based on spend. The more you spend the more you earn:

Current points will be converted at a ratio of 1:2, doubling the points in accounts at a stroke, but not doubling their value as you can see below.

The question of course is what is happening to spending, recognising that earnings are going to drop for most cheaper tickets – typically booked by SME’s to get value for their travel pounds. BA has switched OnBusiness to create Zones. This table is for a free return trip:

New York for example is in Band 7, requiring a £44,400 (allowing for higher earning at higher tiers) spend to get a free return ticket. Hong Kong, LA and San Francisco are in Band 8, requiring a £52,400 spend to earn a free trip. (Assuming this is all spent in the same year and you progress up the Tiers outlined above).

These redemption compare to the current table (returns):

So taking the New York example – currently that journey needs 18,900 OnBusiness points in Club. To earn this you would have to take 9 roundtrips in Club. Bearing in mind you can do this for around £1,000 from Dublin, your £9,000 spend earns almost nothing in the new scheme. Assuming that businesses do not make their employees fly to Ireland to get to JFK, the standard BA price of £2,711 roundtrip to New York would earn 24,400 points in the new scheme earning about a round-trip in the new scheme. BA’s web site says that the new scheme is slightly more expensive in premium cabins and slightly cheaper in World Traveller. This seems to be the case.

A £3,500 roundtrip from Heathrow to Los Angeles flown 9 times would earn 31,875 points which is slightly more than needed for a free return in the new scheme. Under the old scheme these flights would have earned a roundtrip too.

Current Points would be better to be spent now as the redemption rates become high after 27 May. For example if you have 29,000 points in your account you can currently fly one traveller to the US West Coast, round-trip in First Class. After the conversion these become 58,000 allowing a round trip ticket but only in Club World.

The new scheme allows upgrades too, and like the changes to Avios, from most fares except the very cheapest.

This is the new upgrade table (these are one way rates):

Notice the killer number of points needed from Premium Economy to Business in comparison to the number from Business to First for longer flights. The 29,000 point example above, converted to 58,000 new points would allow about 5 segments to be upgraded from WTP to Club – a popular redemption.

This is the current redemption table for upgrades:

The upgrade classes are more restrictive at present:

From Euro Traveller (Y B H booking classes) to Club Europe.

From World Traveller (Y B H booking classes) to World Traveller Plus.

From World Traveller Plus (W E booking classes) to Club World.

From Club World (J C D booking classes) to First

The example 29,000 points would allows about 6 return upgrades so they are slightly more expensive.

So in Summary:

– Harder to earn by a long way, only good news is earning on AA/IB

– Not much change to spending levels and ability to use on more airlines than BA which is to be welcomed

New Feature:

It appears that BA will be offering an Avios-like discount option for up to 5% of the ticket price but the details are sketchy:

We know that sometimes a cash discount on flights will be more useful to your business than earning points. That’s why we’re now offering you the chance to choose member only discounts on selected flights, instead of earning points. You will be able to access member-only discounts on many of our flights worldwide, of at least 5% off the fare. To choose a discount when available, simply select that option at the time of booking.

Existing Booking will not be re-fared if changed after 27 May, and credits will be made at the original redemption rate if cancelled.

The scheme will be closed to redemptions for a couple of days whilst these changes are made:

On the 25 May 2015 the current programme will change and we will migrate to the new programme. From the 25 – 27 May you will only be able to access your On Business account in order to view your account details, points balance and transactions. Please bear with us during this period and you will be sent your new membership and account number when the new programme is up and running on the 27 May 2015. However, if you need to amend the date and time of an existing booking on the 25 and 26 May then you will be able to do this through ba.com.

Of course, the question, is this the start of wholesale migration of BA to a revenue based model?